Case Note & Summary
The petitioners, Narendra Janardan Pathak and others, entered into a 'preliminary agreement' dated 21 February 2011 with the respondents-vendors for the purchase of immovable property. The agreement stipulated that possession would be delivered only at the time of execution and registration of the final conveyance deed, not immediately. The Collector of Stamps, Thane City, by order dated 18 December 2014, adjudicated the document as a 'conveyance' under Article 25(b) of Schedule I of the Maharashtra Stamp Act, 1958, and directed the petitioners to pay deficit stamp duty of Rs.30,00,000 and penalty of Rs.25,80,000. The petitioners appealed under Section 53(1A) of the Act to the Chief Controlling Revenue Authority, which confirmed the Collector's order on 24 February 2016. The petitioners then filed a writ petition under Articles 226 and 227 of the Constitution before the Bombay High Court. The court examined the terms of the agreement and found that possession was not delivered immediately; it was only to be delivered at the time of the final conveyance. Relying on Explanation I to Article 25, which deems an agreement to be a conveyance only if possession is delivered, the court held that the document did not fall within the definition of 'conveyance'. Consequently, the orders of the Collector and the appellate authority were quashed, and the respondents were directed to refund any amount deposited by the petitioners. The court allowed the petition with no order as to costs.
Headnote
A) Stamp Act - Deemed Conveyance - Article 25(b) Explanation I - Preliminary Agreement - The issue was whether a 'preliminary agreement' for sale of property, where possession was not delivered immediately but only at the time of execution of the final conveyance deed, could be treated as a 'deemed conveyance' under Article 25(b) of Schedule I of the Maharashtra Stamp Act, 1958. The court held that since possession was not delivered under the agreement, it did not fall within Explanation I, and therefore could not be treated as a conveyance. The order of the Collector of Stamps and the appellate authority was quashed. (Paras 1-6)
B) Stamp Act - Adjudication of Stamp Duty - Section 53(1A) - Appeal - The petitioners challenged the order of the Chief Controlling Revenue Authority confirming the Collector's order demanding deficit stamp duty and penalty. The court allowed the petition, setting aside both orders, and directed refund of any amount deposited by the petitioners. (Paras 2-6)
Issue of Consideration
Whether a preliminary agreement for sale of immovable property, where possession is not delivered immediately but only at the time of execution of the final conveyance deed, can be treated as a 'conveyance' under Article 25(b) read with Explanation I of Schedule I of the Maharashtra Stamp Act, 1958, and whether the petitioners are liable to pay deficit stamp duty and penalty.
Final Decision
The court allowed the writ petition, quashed the order dated 24 February 2016 passed by the Chief Controlling Revenue Authority and the order dated 18 December 2014 passed by the Collector of Stamps, Thane City. The respondents were directed to refund any amount deposited by the petitioners in pursuance of the impugned orders. No order as to costs.
Law Points
- Interpretation of Article 25(b) and Explanation I of Schedule I of Maharashtra Stamp Act
- 1958
- Deemed conveyance
- Preliminary agreement
- Possession not delivered
- Stamp duty adjudication
Case Details
2019 LawText (BOM) (07) 80
WRIT PETITION NO.13821 OF 2016
Ms. Gauri Godse for the Petitioners, Mr. Saurabh Butala for the Respondents, Mr. S.H. Kankal, AGP for the State
Shri. Narendra Janardan Pathak & Ors.
The Collector of Stamps, Thane City Thane & Ors.
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Nature of Litigation
Writ petition under Articles 226 and 227 of the Constitution challenging an order of the Chief Controlling Revenue Authority confirming the Collector of Stamps' order adjudicating stamp duty on a preliminary agreement.
Remedy Sought
The petitioners sought quashing of the order dated 24 February 2016 passed by the Chief Controlling Revenue Authority and the order dated 18 December 2014 passed by the Collector of Stamps, and refund of any amount deposited.
Filing Reason
The petitioners were aggrieved by the demand of deficit stamp duty of Rs.30,00,000 and penalty of Rs.25,80,000 on a preliminary agreement for sale, which they contended was not a conveyance.
Previous Decisions
The Collector of Stamps, Thane City, by order dated 18 December 2014, held that the preliminary agreement dated 21 February 2011 fell under Article 25(b) of Schedule I of the Maharashtra Stamp Act, 1958, and directed payment of deficit stamp duty and penalty. The Chief Controlling Revenue Authority, by order dated 24 February 2016, dismissed the appeal and confirmed the Collector's order.
Issues
Whether the preliminary agreement dated 21 February 2011, where possession was not delivered immediately, can be treated as a 'conveyance' under Article 25(b) read with Explanation I of Schedule I of the Maharashtra Stamp Act, 1958.
Whether the petitioners are liable to pay deficit stamp duty and penalty as demanded by the Collector of Stamps.
Submissions/Arguments
The petitioners argued that the document was a preliminary agreement and possession was not delivered immediately; it was only to be delivered at the time of execution of the final conveyance deed, and therefore it did not fall within Explanation I to Article 25 of Schedule I of the Stamp Act.
The respondents argued that the document was a deemed conveyance under Explanation I and the petitioners were liable to pay stamp duty as a conveyance.
Ratio Decidendi
A preliminary agreement for sale of immovable property, where possession is not delivered immediately but only at the time of execution of the final conveyance deed, does not fall within Explanation I to Article 25 of Schedule I of the Maharashtra Stamp Act, 1958, and therefore cannot be treated as a 'deemed conveyance' liable to stamp duty as a conveyance. The court held that the Collector of Stamps and the appellate authority erred in treating the document as a conveyance.
Judgment Excerpts
The Collector of Stamps in adjudicating stamp duty on this document by an order dated 18 December 2014 directed that the document would fall in the category of 'conveyance' falling under Article 25(b) of Schedule-I to the Stamp Act.
From this it is found that amount of Rs.6,00,00,000/- being agreed as total consideration is not disputed and out of that Rs.1,00,00,000/- has been acknowledged in receipt by the Vendor-Intervener, as earnest.
Procedural History
The petitioners executed a preliminary agreement on 21 February 2011. The Collector of Stamps, Thane City, passed an order on 18 December 2014 adjudicating the document as a conveyance and demanding deficit stamp duty and penalty. The petitioners appealed under Section 53(1A) of the Maharashtra Stamp Act, 1958, to the Chief Controlling Revenue Authority, which dismissed the appeal on 24 February 2016. The petitioners then filed the present writ petition under Articles 226 and 227 of the Constitution before the Bombay High Court, which was heard and allowed on 17 July 2019.
Acts & Sections
- Maharashtra Stamp Act, 1958: Section 53(1A), Article 25(b) of Schedule I, Explanation I to Article 25
- Constitution of India: Articles 226, 227
